Hell Hath No Fury Like A Commissioner Scorned

On May 15th, SEC Commissioner Daniel A. Gallagher submitted to the Commission his personal comments concerning the Office of Financial Research’s “Asset Management and Financial Stability Report.” The comments pointedly critique the report, the Financial Stability Oversight Council (the “FSOC”) which requested the report (and which has prohibited Gallagher from attending meetings as an observer), and the FSOC process which, he believes, is “far more dangerous to our financial markets than the purported risk factors it was purportedly created to address.” Gallagher Comments.

The SEC’s Budgetary Needs

On May 14th, SEC Chair Mary Jo White testified before the Senate subcommittee on financial services concerning the agency’s fiscal year 2015 budget request. A top SEC priority under the budget request is to add 316 additional staff to the examination program in its Office of Compliance Inspections and Examinations. This would allow the agency to examine more registered firms, particularly in the investment management industry; build out the examination program to implement newly expanded responsibilities with respect to municipal advisors, swap market participants, private fund advisers, crowdfunding portals and other new registrants; and more effectively risk-target and monitor other market participants. The Enforcement Division seeks to hire 126 new staff, including additional legal, accounting, and industry specialized experts, primarily for investigations and litigation. The SEC also requests 25 new positions for its Division of Corporation Finance. These resources are needed for Corporation Finance to continue its multi-year effort to enhance its disclosure review program for large or financially significant companies. White Testimony.

Tick Test

On May 14th, Bloomberg, citing the remarks of Stephen Luparello, Director of the Division of Trading and Markets, reported that the SEC will soon begin its tick test pilot program, which would widen the minimum stock price spread for small sized firms. The pilot is meant to test whether larger price spreads would improve the liquidity for smaller companies’ stock. Tick Test.

Commissioner Gallagher Seeks More Information about Investment Advisors

On May 9th, SEC Commissioner Daniel M. Gallagher discussed the dearth of information concerning investment advisers, suggesting the use of third-parties (including self-regulatory organizations) to remedy that shortcoming. The additional information would also be useful in determining whether the fiduciary duty owed by brokers and investment advisors should be harmonized. Gallagher Remarks.

Draft EDGAR Filer Updates

Draft updates to the EDGAR filer manual have been posted. The draft updates affect the General Information, EDGAR Filing, and N- SAR Supplement. The updates are being made to reflect changes scheduled to be implemented on June 16, 2014.

Investor Alerts

The SEC’s Office of Investor Education and Advocacy issued investor alerts on the potential risks involving investments in marijuana- related companies and mutual fund fees and expenses.